WHITE PAPER

Lenovo Converged HX Series: Why Lenovo for Hyperconverged?

Sponsored by: Lenovo
Kevin Permenter Eric Sheppard
March 2016

EXECUTIVE SUMMARY

Today's enterprise datacenter can be one of the most complex business environments with dozens
(for smaller businesses), hundreds (for larger and midsize businesses), and even thousands
(for hyperscale businesses) of servers that must be managed and monitored. At this level, just being
able to manage the cords can be a challenge — let alone keeping up with the growing need for more
agility and scalability within the datacenter. Simply put, companies are aggressively looking for less
complexity and more agility from their servers. Hyperconverged solutions deliver simplicity in spades with
their plug-and-play setup and their ability to deploy workloads faster than traditional servers.

What Is Hyperconverged?
Hyperconverged systems are an emerging breed of solutions that natively collapse core storage,
compute, and storage networking functions into a single software solution or appliance. This is in
contrast to traditional integrated platforms and systems in which autonomous compute, storage, and
networking systems are integrated at the factory by the vendor or by resellers. In addition to integrating
storage and compute functions into a single node (or a cluster of nodes, each offering compute and
storage functions), all hyperconverged systems employ:

 A distributed file system or an object store that serves as the data organization, management,
and access platform
 A hypervisor that provides workload adjacency, management, and containerization in addition
to providing the hardware abstraction layer (Further, the hypervisor hosts essential
management software needed to manage the platform and is also used to bootstrap the server
hardware.)
 An (optional) Ethernet switch to provide scale-out and/or high-availability capabilities
(However, switching and/or networking is used not to bridge the compute and storage layers
but to provide high-availability and resiliency capabilities to the storage and computing stacks.)
The hyperconverged infrastructure (HCI) market segment integrates a collection of technologies that
span the functional areas of storage, computing, networking, hypervisor-based virtualization,
containers, and infrastructure management. IDC estimates that the market for hyperconverged
infrastructure is in the beginning stage of development and penetration, and we believe the opportunity
for this market to be quite significant.

March 2016, IDC #US41083716

Market Trends
Hyperconverged systems offer advantages including simplicity, lower administration costs, and
reduced vendor involvement. This technology sits in the middle of a confluence of trends that will
continue to provide the hyperconverged market with momentum, including:

 Investment in the software-defined datacenter will continue to grow rapidly. Hyperconverged

infrastructure is positioned well to ride the coming wave of software-defined infrastructure. IDC
defines software-defined infrastructure as platforms that deliver the full suite of compute, storage,
or networking services via a software stack that uses (but is not dependent on) industry-standard
x86 hardware built with off-the-shelf components. The modular nature of hyperconverged will find
significant traction, with organizations choosing to walk the software-defined path.
 Progress is seen in the public sector. The benefits of hyperconverged systems also play well
within the state and local government and education (often called "SLED") market. Some
hyperconverged vendors have made inroads with large deals within the Department of
Defense and universities. The appeal is obvious as government agencies and universities
must handle a large variety of workloads while often dealing with very limited IT budgets.
 Scale-out workloads will continue to be an IT driver. In a recent IDC survey of 250 IT managers
and executives, respondents indicated that they are expecting double-digit growth in scale-out
workloads over the next 24 months. In essence, hyperconverged systems are modular systems
built with scale-out workloads in mind. This bodes well for vendors of hyperconverged technology
that have made scalability a key feature in their product development road maps.
 The need for optimization for 3rd Platform workloads is growing. 3rd Platform workloads are
driving an explosion of data. As a result, the need for new infrastructure hardware optimized
for the 3rd Platform is growing rapidly. This growth in 3rd Platform workloads presents an
opportunity for hardware vendors to provide technology that is specially designed to handle
the rigors of big data, analytics, private/public cloud, and virtualization.
Use Cases
While the trends mentioned previously are driving companies to consider hyperconverged systems,
the benefits to the line-of-business (LOB) users are even more pronounced and often serve as an even
stronger catalyst for consideration and purchase of these systems (see Figure 1):

 Simple deployment and rapid scalability. Currently, virtual desktop infrastructure (VDI) is one
of the biggest drivers within the hyperconverged market, and it accounts for an even larger
portion of midmarket hyperconverged system shipments primarily because of the simplicity
that hyperconverged solutions offer. Hyperconverged eliminates the up-front design and
integration work necessary for large VDI deployments. In addition, hyperconverged systems
allow IT resources to scale quickly as the number of business users ramps up.
 Simple and lower-cost remote office/branch office (ROBO) solutions. Remote offices and
branch offices, like retail stores, bank branches, or manufacturing plants, play a crucial role in
company operations and often have specialized IT infrastructure needs and challenges. The
locations, though geographically distributed, often must be managed with little to no
specialized IT support. Hyperconverged systems are well suited for this market because they
present IT managers with a simple, lower-cost scaled solution.
 Highly available and redundant clusters that lower risks. As enterprise-level applications grow
in complexity, managing the risk of data loss and/or disaster becomes even more important.
With legacy infrastructure, the data backup and disaster recovery process can be complicated
and time consuming at best and completely ineffective at worst. Hyperconverged systems
offer high availability and redundancy because of their multinode deployment capabilities.

©2016 IDC #US41083716 2

FIGURE 1

Use Cases for Hyperconverged

Source: IDC, 2016

Why Hyperconverged Versus Other Options?

Hyperconverged systems are part of the new thinking regarding datacenter infrastructure technology.
Ever tasked with doing more with less, CIOs are aggressively looking for technology to help them meet
their business needs while improving overall operational efficiency (see Figure 2).

FIGURE 2

Top Hyperconverged Drivers

Other Business agility

(21.5%) (13.9%)

Disaster
Support private/ recovery
hybrid cloud (18.5%)
(11.1%)

IT staff Datacenter
productivity utilitization/
(13.7%) capital spend
Total = 100% (21.3%)

n = 108

Source: IDC's Converged Systems Survey, December 2015

©2016 IDC #US41083716 3

Hyperconverged solutions present today's CIOs with several key advantages over traditional IT
infrastructure, including:

 Lower capex. Hyperconverged systems combine servers and storage hardware into one single
solution, reducing the number of overall physical systems (both servers and storage) that must
be purchased upon first deployment. Hyperconverged systems are very often built with
"commodity-level" hardware, further reducing their initial purchase costs. Finally, there is
additional saving at the time of purchase because hyperconverged systems greatly reduce the
costs and complexity around deployment and systems integration — most systems can be
deployed in less than two hours with hyperconverged systems as opposed to weeks with
traditional IT hardware.
 IT productivity. With traditional IT, staff productivity is stunted by the heavy daily environment
management needs. With hyperconverged systems, IT staff are free from the obligation of
daily management of application-related tasks. A new virtual machine (VM), for example, can
be provisioned in minutes with hyperconverged systems as opposed to hours with traditional
IT hardware/software. In turn, IT staff can spend more time exploring new ways to support the
business and innovate new tools/techniques.
 Long-term opex. Hyperconverged systems allow for system cluster management at the
hypervisor level, allowing IT administrators to handle more virtual machines than with
traditional shared storage solutions. This greatly minimizes the day-to-day maintenance
needed for a hyperconverged system; it also reduces the need for employees with specialized
storage skills. Also, some hyperconverged systems allow for the use of APIs, which lessens
the amount of administrative work required to maintain the system. With some
hyperconverged systems, the time needed to manage storage can shrink from one to two
hours per day to one to two hours per month.

Hyperconverged Competitive Dynamics

The hyperconverged competitive landscape continues to expand, with new entrants and new products
being introduced at a rapid rate. A few overarching trends are helping shape the competitive
landscape for hyperconverged solutions:

 Wave of bigger generalists. For years, the pure-play hyperconverged players had the market
to themselves. As growth continued and the broader IT markets felt the pinch of a slowdown,
many larger players took notice. Over the past 18 months, some of the biggest names in the
technology market have introduced hyperconverged offerings by either internal development
or strategic partnership.
 Growth in hyperconverged software deployments. The vendor landscape in this market has
coalesced around two deployment strategies: appliance and software only. While the majority of
vendors in the hyperconverged market are appliance vendors, the number of software-only
vendors continues to grow rapidly. Software-only vendors provide customers with more hardware
flexibility, allowing customers to modify their systems for greater storage or enhanced
performance. Some vendors have the ability to offer both options to their customer base.
 Evolving strategic partnerships. The hyperconverged market at its core is about bringing together
traditional infrastructure (server, storage, networking, etc.) into one single package. Many vendors
have joined forces with leaders to offer a complete hyperconverged solution. Yet many of these
partnerships remain simple packaging exercises or "meet in the channel" type of agreements.
Such partnerships have often left end users with far less than seamless support. For the market to
continue to mature, there is a need for deeper and more seamless partnerships.

©2016 IDC #US41083716 4

Why Lenovo? Lenovo/Nutanix Differentiation Factors
In November 2015, Lenovo announced a partnership with Nutanix to develop and sell a new line of
hyperconverged appliances. These appliances will target organizations looking to bring the agility and
scalability of public clouds into their own datacenter environments. The appliances that feature the
Nutanix Xtreme Computing Platform (XCP) software are currently on the market, with three models
available for purchase:

 Lenovo Converged HX3500: Targeted at smaller virtualization workloads and some remote
office/branch office environments
 Lenovo Converged HX5500: Targeted at big data workloads including Hadoop and Splunk, in
addition to disaster recovery
 Lenovo Converged HX7500: Targeted at large database workloads and I/O-intensive
workloads such as SQL and Oracle RAC
These appliances offer end users a couple of potentially powerful points of differentiation:

 Added value of XClarity. Lenovo's new centralized resource management software allows
IT managers to automate a number of lower-level tasks, including hardware discovery, hardware
inventory status, and firmware updates. This capability, along with a dashboard-driven interface,
allows IT staff to spend less time running/managing their IT and more time innovating and
improving their business.
 Integration with Acropolis. As the amount of data these hyperconverged systems handle continues
to grow, the role of the hypervisor becomes increasingly important. The new line of Lenovo-branded
hyperconverged appliances will integrate seamlessly with the open source KVM-based Acropolis,
which is built into the Nutanix Xtreme Computing Platform. The ability to leverage Acropolis presents
end users with the flexibility to forgo more expensive hypervisors if they choose.
The partnership between Lenovo and Nutanix also presents some potentially compelling
characteristics that set it apart from other partnerships within the hyperconverged market:

 Deeper-level partnership. Partnering within the hyperconverged market is nothing new. In fact,
Lenovo and Nutanix have other partnership agreements. However, this partnership goes
beyond simple resale and packaging. These two companies have agreed to work closely at
every level, including engineering, go to market, and support.
 Dedicated Lenovo sales and support. For customers, the possible benefits of this partnership
include the seamless level of support offered for these products. Lenovo will handle the sales
with its larger multinational salesforce. Further, Lenovo will manage lower-level to midlevel
software support coupled with a guided handoff to a Nutanix software expert when needed for
high-level software support.
 Lenovo's large install base. Lenovo has a large install base of VARs and partners, allowing
these appliances to extend their reach into vertical markets and specialized submarkets. Also,
Lenovo's customers will be able to deploy a Nutanix-based hyperconverged solution without
giving up their preferred Lenovo support contract.
 Long-standing reputations. This partnership will merge one of the leading hyperconverged software
solutions and one of the largest suppliers of x86 servers in the world. Further, Lenovo's servers are
built on System x, which has a long history of deployments within datacenters where quality,
reliability, and security have been high priorities. This will provide customers with a deeper sense of
confidence about the potential quality of the products. The track records of both companies should
help alleviate any trepidation among customers regarding longer-term investment.

©2016 IDC #US41083716 5

CHALLENGES/OPPORTUNITIES

The hyperconverged systems market has grown at a torrid pace over the past four quarters. The
higher growth and the larger profit margins in this market (relative to the growth and profit margins in
the traditional enterprise systems market) are rapidly attracting new entrants. The challenge for
Lenovo will be to make the appliances stand out from the crowd and provide a reason for potential
customers to choose the appliances versus others on the market. This can be done in a number of
ways; however, according to IDC's most recent survey of current and potential hyperconverged
customers, better service/better support was one of the top reasons for switching converged systems
suppliers. By focusing on providing seamless support for the appliances, Lenovo can go a long way
toward truly differentiating itself in this crowded market.

Lenovo must lead with the message that it is much more than a server company and that it provides a
full spectrum of enterprise datacenter products, including switches, storage, and workstations. This
"one-stop shopping" aspect is attractive to many potential customers and may be a major point of
differentiation for Lenovo's HCI appliances. In fact, according to IDC's most recent survey of current
and potential hyperconverged customers, nearly 80% of companies felt that it was important for their
HCI vendor to be able to offer a complete product portfolio outside of hyperconverged systems.
Lenovo must work this message throughout its marketing and selling of these products to truly set
them apart from many of the other HCI solutions.

CONCLUSION

As mentioned previously, companies are aggressively looking for less complexity and more agility from
their servers. Hyperconverged solutions deliver simplicity with their plug-and-play setup and their
ability to deploy workloads faster than traditional servers. Any solution that provides the desired level
of simplicity while meeting the rigors of datacenter performance demands will find purchase among
end users. However, only solutions that truly differentiate themselves will be positioned to become
leaders within this market.

The appliances from the deeply integrated partnership between Lenovo and Nutanix address many of
the shortcomings of traditional infrastructure mentioned previously. Also, this partnership leverages
Nutanix's reputation as one of the leaders in HCI software and Lenovo's servers with their System x
heritage to provide end users with an additional sense of confidence as to the potential quality of the
appliances. Further, this level of partner integration is a new and exciting shift in the HCI market,
providing customers with rare advantages regarding support and maintenance. Indeed, the Lenovo
appliances are well positioned to make an impact on the HCI market.

©2016 IDC #US41083716 6

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory
services, and events for the information technology, telecommunications and consumer technology
markets. IDC helps IT professionals, business executives, and the investment community make fact-
based decisions on technology purchases and business strategy. More than 1,100 IDC analysts
provide global, regional, and local expertise on technology and industry opportunities and trends in
over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients
achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology
media, research, and events company.

Global Headquarters

5 Speen Street
Framingham, MA 01701
USA
508.872.8200
Twitter: @IDC
idc-insights-community.com
www.idc.com

Copyright Notice

External Publication of IDC Information and Data — Any IDC information that is to be used in advertising, press
releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or
Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right
to deny approval of external usage for any reason.

Copyright 2016 IDC. Reproduction without written permission is completely forbidden.